Court action for electricity provider

Updated
December 05, 2013 19:56:00

An electricity provider is being taken to court over allegations it misled customers over discounts on electricity prices. The Australian Competition and Consumer Commission claims AGL South Australia engaged in misleading or deceptive conduct.

MARK COLVIN: The national consumer watchdog is taking an electricity provider to court over allegations that it misled customers over electricity price discounts.

The Australian Competition and Consumer Commission claims that AGL South Australia engaged in misleading or deceptive conduct

Caroline Winter reports.

CAROLINE WINTER: While it's not clear how many customers are affected, it is clear their complaints are being taken seriously.

The Australian Competition and Consumer Commission has begun Federal Court action against electricity provider AGL South Australia.

The ACCC alleges the company told customers they would receive a specified discount if they signed onto an energy plan. But that the company later increased its rates and despite telling customers the discounts would remain, they were eroded.

Gerard Brody is CEO of the Consumer Action Law Centre in Victoria.

GERARD BRODY: The concern is that a representation is made that you'll receive a certain percentage discount, but later on the energy company might increase the base rate from which that discount is claimed. And that can erode any discounts. So it'll be a good opportunity for the court to determine whether this is fact misleading representations under the Australian Consumer Law.

CAROLINE WINTER: He says it's vital the regulator takes action where it sees fit, because all too often customers are being sold a pup.

GERARD BRODY: The Consumer law says that businesses shouldn't mislead their consumers, and particularly when it comes to prices of goods or services.

CAROLINE WINTER: Gerard Brody says AGL isn't alone, but cases like this should send a stern message to all retailers.

He says the major concern is the difficulty consumers have in understanding what's on offer and being able to switch providers to make savings.

GERARD BRODY: It makes it extremely difficult to shop around if the next day the energy retailer is able to up the price after you've just signed a fixed period contract.

CAROLINE WINTER: Do you think there needs to be an overhaul of how the laws work?

GERARD BRODY: We do have strong prohibitions already around misleading representations, and misleading and deceptive conduct. It is important that the regulator takes steps to enforce those laws that we already have. But there is an opportunity to consider whether there needs to be stronger laws.

CAROLINE WINTER: Ross Wommersly is executive director of the South Australian Council of Social Service. He says the state has one of the highest electricity prices and rates of disconnections in the country and consumers are vulnerable.

ROSS WOMMERSLY: But if those discounts are dressed up in contracts that mean that, in fact, the discounts don't get realised, I think people will become very devastated in their relationships with their retailers.

CAROLINE WINTER: AGL holds the lion's share of customers in South Australia, controlling more than 50 per cent of the market.

Ross Wommersly says allegations like this can erode trust across the sector.

In a statement, AGL said it takes the allegations seriously and will review the nature and basis of the matters alleged.

The ACCC says it's seeking a range of penalties, including publication orders, a compliance program and refunds for affected customers.